Portland Cement plans to lay off 1,500 employees, sell land
The firm will close its plant in March 2017 for rehabilitation, with operations expected to continue from April. Restructuring will take 90 days, says EAPCC chairman William Lay
East African Portland Cement Company plans to retrench 1,500 out of its 2,000 workforce and sell land worth Sh8 billion to turn around the company, the management said yesterday, dismissing auditor-general’s report that the firm is insolvent.
EAPCC chairman William Lay said the country’s third largest cement maker by market share is “asset rich but cash poor”.
“We don’t need a bailout by the government. Instead we are presenting a solution which requires minimum intervention that will turnaround the company and position it for growth,” Lay said in Nairobi.
The public listed company plans to restructure its operations in three months, including offering the 2,000 employees an early retirement package.
He said the firm has recommended a structured financing programme to address the short to long-term requirements, including growth and expansion.
“This is a three-pronged financial injection programme which will in- clude debt restructuring and stabilising operations, inviting financial investors and extracting value from idle assets by closely working with the government,” Lay said.
The board was reacting to a recent report by the Auditor General Edward Ouko who has casted doubt on the firm’s ability to stay afloat with liabilities amounting to Sh4.9 billion, against an asset value of Sh2.11 billion.
Lay, however, said the company has a Sh5 billion debt, owed to KCB against an asset (land) worth Sh8 billion.
He said the firm will close its plant in March 2017 for rehabilitation, with operations expected to continue from April. “We need to have our cooler fixed. The restructuring including retrenchment will be in the next 90 days,” Lay said.
The company reported a 42 per cent drop in full year net profit last Friday.
Net profit dropped from Sh7.15 billion in 2015 to Sh4.14 billion in the year ended June 2016, blamed on high operational costs and foreign exchange losses.
Revenues however increased from Sh8.41 billion to Sh8.87 billion, driven by higher cement sale.
EAPCC director Kung’u Gatabaki with chairman Bill Lay during a media briefing in Nairobi yesterday